Fees Related to Small Business

[Tom in Carolina]

Greetings,

I have a small business and get 1099-NEC $$

When I file taxes I have expenses including Turbo Tax, Audit Protection, etc.

Considering my taxes involve both the small business and my personal tax income...

How do I divide up the portion of the expenses above vs the 

personal side of the equation?

My CPA from many years ago said to enter all such expenses @ 100% as a small business expense.

TIA,

T

[RobertB4444 · Accepted solution]

There are a couple of ways to think about this.

First, the way your CPA thought about it was to say that if you didn't have the 1099-NEC schedule C income then you wouldn't be messing around with TurboTax in the first place.  In which case the only reason that you are doing it is because of the business so it is a definite business expense.

But if you have a more complicated return that would require you to pay for the software even if you didn't have the business expense on there then you should be dividing the expense between personal and business.  You could do this based on time that you spend (40% of the time you spent was entering personal stuff, 60% was business or something like that) or just call it a 50-50 split.  You can use any method that you're comfortable with just document your reasoning in case you have to explain it later.

@Tom in Carolina 

[Tom in Carolina]

Robert - Great Answer !